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Johannesburg - Absa Group [JSE:ASA], the South African bank majority owned by Barclays, will likely need another $43m (about R296m) this year to boost liquidity to meet tighter regulations, its CEO said on Tuesday.
Maria Ramos also told the Reuters Africa Investment Summit that Absa, South Africa's largest retail lender, was also considering moving back into Angola, although it has no concrete plans at the moment.
Absa, like other South African lenders, is likely to be squeezed by tougher global banking rules that will force lenders to hold more short-term liquid assets, such as government bonds.
Absa spent R300m in the previous financial year, lifting its holding of such assets.
"We're probably going to end up spending, more or less, the same amount of money," Ramos said when asked about this financial year.
"That's one of the challenges we all face. Increasing those liquidity buffers costs money."
Analysts have said South African banks will readily meet the capital requirements of the new Basel III global banking rules but will struggle with liquidity regulations due to their reliance on short-term funding.
Under the proposed rules, banks will have to hold enough liquid assets such as sovereign debt or high-ranked corporate debt, to tide them through short-term shocks.
But unlike some other countries where regulators allow banks to hold high-grade corporate debt to meet such requirements, South African banks are currently limited to government debt, narrowing their options.
"At some point we are going to have to sit down and have a discussion about what qualifies as a liquid asset," Ramos said.
She also said Absa could consider returning to oil-rich Angola, which it left a few years ago under the bank's previous management.
"It's one of the countries that we're certainly looking at. It's a big country on this continent."
Absa has also said for some time it is considering opportunities in Nigeria, although it has not announced anything more specific.
Maria Ramos also told the Reuters Africa Investment Summit that Absa, South Africa's largest retail lender, was also considering moving back into Angola, although it has no concrete plans at the moment.
Absa, like other South African lenders, is likely to be squeezed by tougher global banking rules that will force lenders to hold more short-term liquid assets, such as government bonds.
Absa spent R300m in the previous financial year, lifting its holding of such assets.
"We're probably going to end up spending, more or less, the same amount of money," Ramos said when asked about this financial year.
"That's one of the challenges we all face. Increasing those liquidity buffers costs money."
Analysts have said South African banks will readily meet the capital requirements of the new Basel III global banking rules but will struggle with liquidity regulations due to their reliance on short-term funding.
Under the proposed rules, banks will have to hold enough liquid assets such as sovereign debt or high-ranked corporate debt, to tide them through short-term shocks.
But unlike some other countries where regulators allow banks to hold high-grade corporate debt to meet such requirements, South African banks are currently limited to government debt, narrowing their options.
"At some point we are going to have to sit down and have a discussion about what qualifies as a liquid asset," Ramos said.
She also said Absa could consider returning to oil-rich Angola, which it left a few years ago under the bank's previous management.
"It's one of the countries that we're certainly looking at. It's a big country on this continent."
Absa has also said for some time it is considering opportunities in Nigeria, although it has not announced anything more specific.
